Lingering concerns over the Eurozone economy, jitters in global stock markets and discussions of when, not if, a US rate rise occurs is impinging on growth, says the report from international real estate firm Knight Frank.
Annual growth of 0.1% is the index's weakest rate of growth since the final quarter of 2011 and of the 56 housing markets tracked some 27% recorded an annual decline in prices.
Despite stringent cooling measures, Hong Kong saw house price growth of 20.7% but in China growth was down 5.7%. Increasing liquidity and the flow of wealthy mainland Chinese investors into Hong Kong’s residential sector meant the number of new homes sold in the first half of 2015 exceeded 8,700.
'The recent volatility in the Chinese stock market has underlined the fragility of the Eurozone’s recovery and has pushed the likelihood of a rate rise by the US Federal Reserve further back which is good news for home owners in the US and beyond but bad news for corporate balance sheets,' said Kate Everett-Allen, head of international residential research at Knight Frank.
The report points out how housing markets in China and the US, two countries which together account for around 33% of global GDP, are following divergent paths. Since the start of 2014 mainstream prices in China have fallen on average by 6.2% while the average price of a residential
property in the US is up 7.6% over the same period.
In Dubai, mainstream residential prices fell by 2.8% quarter on quarter and declined by 12.2% in the year to June. 'Weaker demand, a strong US dollar and ongoing cooling measures have dampened sales volumes in the mainstream sector,' said Everett-Allen.
She also pointed out that Europe is no longer the weakest performing world region, a title it has held for 15 consecutive quarters. On average prices across Europe increased by 2.8% year on year
with Turkey, Estonia, Luxembourg and Ireland all achieving double digit annual price growth.
